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Is it possible to claim 15-16 expense in 16-17???

satya (no) (88 Points)

16 June 2016

if i didn't make provision for audit fees of 15-16 and i claim it in 16-17 on payment basis in-spite of that following accrual system of accounting will it violate matching principle of accounting and is that expense allowed as per I.T act??

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4 Replies

CA MANISH BINDAL (CHARTERED ACCOUNTANT ) (535 Points)
Replied 16 June 2016

It depends on how did you prepare your accounts, if you are preparing your accounts on cash basis then audit fees paid in this year will be allowed. But if you are maintaing your accounts as per mercentile basis then you cannot claim audit fees,

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Vishal Goel (Chartered Accountant) (1688 Points)
Replied 17 June 2016

Agree with Manish Ji

If you are maintaining your accounts on accrual basis then this is prior period expenses which is not allowed as per IT act ....

satya (no) (88 Points)
Replied 17 June 2016

my reply to mr. vishal goel

can u pls elabrate some section like that?

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 18 June 2016

Hello @ Satya

Kindly read the section 37 of income tax act. which disallows the expenses which are not related to the current year.

Condition under section 37 of the income tax act.

Such expenditure should not be covered under the specific section i.e. sections 30 to 36.
Expenditure should not be of capital nature
The expenditure should be incurred in the accounting year.
The expenditure should not be of personal nature.
The expenditure should have been incurred wholly or exclusively for the purpose of the business or profession.
The business should be commenced.